Report Explores Benefits, Impacts of Allowing Prior-Prior Year Income Information On the FAFSA

May 7, 2015 - A growing number of lawmakers and researchers agree that one simple policy change would streamline financial aid applications and broaden college access for students. The benefits far outweigh any side effects of this change – many of which are negligible, according to a new report from the National Association of Student Financial Aid Administrators (NASFAA).

The change, allowing the use of prior-prior year (PPY) tax information on the Free Application for Federal Student Aid (FAFSA) – as opposed to one-year prior information – would increase the form’s accuracy and give families an earlier and better idea of their college costs, long before tuition bills begin to arrive. Currently, when the FAFSA becomes available each January 1, families often have to estimate their prior-year tax information, leading to inaccuracies and revisions that decrease time for smart planning.

Critics of a move to prior-prior year income data say the change could increase Pell Grant awards (and thereby program costs) caused by an increase in awards from professional judgments. But through interviews with a wide swath of higher education professionals this new report finds that the change would actually have negligible effects. The report does contend that if more applicants were able to file the FAFSA earlier thanks to prior-prior year, the volume of Pell Grant awards could increase, but this would signal greater college access and a mark of success for the policy change. Critics have also voiced concern about the willingness of states and institutions to move to prior-prior, but the report finds that most states and institutions would readily follow the federal government’s move to the usage of prior-prior year income.

“NASFAA has long advocated for a move to prior-prior year information and we now have the evidence to show there’s no reason to delay its implementation. The endorsement of prior-prior year in this report is particularly significant because it is representative not only of the financial aid community, but also represents views from admissions officers, state grant agencies, and college access programs,” said Justin Draeger, president and CEO of NASFAA. “We urge the Department of Education to use its existing authority to implement this common-sense change today.”

To construct the report, NASFAA convened a broad sample of higher education professionals, including financial aid administrators and representatives from the National Association for College Admission Counseling (NACAC) and TRIO, and worked with the National College Access Network and The Education Trust. The project was funded through the Bill and Melinda Gates Foundation’s Reimagining Aid Design and Delivery initiative.

For more on the advantages and considerations of a shift to prior-prior year income information, please see the full report or contact NASFAA at 202-785-6959 or news@nasfaa.org to set up an interview with a policy expert.

About NASFAA

The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents more than 20,000 financial aid professionals at nearly 3,000 colleges, universities, and career schools across the country. NASFAA member institutions serve nine out of every ten undergraduates in the United States. Based in Washington, D.C., NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators. For more information, visit www.nasfaa.org.